What's Making Subway Sales Slump So Hard?

Subway certainly isn’t the only American chain to have a lengthy and storied history (see also: In-N-Out). But as this organization of global sandwich slingers turns 50, it’s totally reasonable to think they’ve got it figured out by now. It’s the first few years in business that are supposed to be the hardest for any restaurant, right?

While the Golden Arches is busy throwing everything it can think of at turning its sales figures around (we mean everything—even rethinking the way it toasts its buns), Subway seems to be searching for new ideas but not finding many. That’s a problem, since analysts have observed that what American consumers regard as healthy is constantly changing, but Subway isn’t.

Just how bad are things for Subway as compared to the well-explored growing pains at McDonald’s? WaPo reporter Drew Harwell wrote,
[pullquote]”But in some ways, Subway’s money-making challenges look even sharper than those of the [McDonald’s]. The average Subway sold $437,000 worth of subs, sodas and cookies last year, the smallest haul in half a decade, and about a fifth as much as the typical Mickey D’s, which pulls in $2.4 million per store.”[/pullquote]
Darren Tristano is the executive vice president of industry researcher Technomic. He summarized why this is happening for WaPo,

“The ‘Subway fresh’ has lost its appeal with consumers, because to them fresh has evolved to mean something very different. More people have money to spend, and they’re choosing to spend a little bit more on better concepts where they get a better product. . . . Subway’s strategy has only been to open more stores, and ultimately those stores just cannibalize each other.”

Tristano is of course referring to the meteoric rise of Chipotle, a chain that knows and responds to what its customers want like no other. You say the majority of American consumers are concerned about genetically modified organisms (GMOs) in their food supply? Great, Chipotle will phase them out.

The fact that a January 2015 poll of American Association for the Advancement of Sciences scientists revealed that the overwhelming majority of scientists believe GMOs are safe for human consumption doesn’t matter. What matters is what the public wants, and what the public wants right now is a different vision of “healthy” and “fresh” than what Subway currently offers.

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